Minnesota 2020, the St. Paul-based think tank, has outlined a new program to stabilize Minnesota’s declining housing market. The program, known as The Minnesota Home Values Guarantee Program claims that it will stop the housing market free fall and stabilize prices.

This unique approach to the real estate and funding crisis will get credit markets lending again for housing and housing related products and services.

How you may ask?

The program is aimed at protecting a homeowner’s down payment by acting as a sort of insurance policy for the first five years after the close of escrow. Hopefully this will put people’s minds at ease about losing this large sum of money and they can once again feel safe investing in a property. The Minnesota Home Values Guarantee Program guarantees that a buyer could get their down payment returned even if the market continues to decline.

The thought process is that with more people feeling comfortable with the state of their down payment, the more likely they will invest in the local housing market and the more likely is will stabilize prices and return the housing market to a normal rate of appreciation. In theory this will build a bottom to house values and protect down payments and home equity.

Minnesota 2020, the group that is behind this program, was founded in 2007 by former Democratic Farm Labor state House Minority Leader Matt Entenza. The group commissioned the report that was written by Larry Buegler, the retired president of Farm Credit Bank of St. Paul, and Lee Egerstrom, a former St. Paul Pioneer Press reporter and Minnesota 2020 fellow that acts as the outline of how the program will work.

The program is similar to the earlier Land Values Guarantee Program developed by the Farm Credit Bank of St. Paul, but it will work in reverse: home values will be stabilized first making it easier for lenders to restructure troubled loans once property values start to rebound.